Diplomats Free Trade Agreement
Tax & AccountingLegalCorporateMarch 03, 2022

New Zealand signs ground-breaking free trade deal with United Kingdom

By:Marilyn Hay

The New Zealand Government has signed a high quality, comprehensive free trade agreement (FTA) with the United Kingdom (UK) that will eliminate many existing tariffs. 

On day one, 99.5% of current New Zealand trade will enter duty-free, through a combination of tariff elimination and duty-free quotas. Quotas will grow over time and then be removed.

Horticulture highlights

  • Wine tariffs will be eliminated from entry into force of the FTA, as well as tariffs on honey, onions and kiwifruit.
  • Tariffs will be eliminated over 3 years for apples with a significant new duty-free quota for off-season exports for the first 3 years.
  • Overall, 99.9% of New Zealand’s horticultural trade will enter the UK duty free at entry into force of the FTA, and 100% within 7 years.

Fish and seafood highlights

  • 46% of New Zealand’s current fish and seafood and trade will enter the UK duty free at entry into force of the FTA, 99.5% within 3 years, and 100% within 7 years.
  • Tariffs will be eliminated from entry into force of the FTA on hoki and on mussels after 3 years.

Dairy highlights

  • 60% of New Zealand’s current dairy trade will enter the UK duty free at entry into force of the FTA, 99.5% within 5 years, and 100% within 7 years.
  • Tariffs will be eliminated over 5 years for butter and cheese, with significant new duty-free quotas that will allow trade to grow during the transition period until all tariffs and quotas are eliminated.
  • Many other dairy products will also become tariff free at entry into force, with the remainder eliminated over 3 or 7 years.

Meat highlights

  • Tariffs will be eliminated after 10 years for beef. A product-specific safeguard may then apply until year 15.
  • Tariffs will be eliminated after 15 years for sheep meat.
  • Significant new quotas will be established for both products which will allow trade to grow during the transition period until all tariffs have been eliminated.

Services and investment

  • Services commitments will help facilitate and provide certainty of access and regulatory conditions for services exporters. Market access commitments build upon and add to those each country has made under the WTO General Agreement on Trade in Services.
  • The investment provisions incorporate modern investment protection rules similar to those contained in other recent FTAs, providing certainty and stability in regard to market access for investors from both countries. This will help to create the conditions for further growth and development in two-way investment between New Zealand and the UK.

Māori interests

  • The FTA includes a ground-breaking chapter on Māori Trade and Economic Cooperation which recognises the unique context and special relationship between Māori and the British Crown being original signatories to the Treaty of Waitangi (te Tiriti o Waitangi). It also promotes cooperation between the Parties to the Agreement to enable and advance Māori economic aspirations and well-being.
  • The FTA also includes New Zealand’s Treaty of Waitangi exception that ensures that nothing in the FTA would prevent the New Zealand Government from meeting its obligations to Māori, including under the Treaty of Waitangi (te Tiriti o Waitangi).

Environment

  • The FTA includes the most far-reaching commitments New Zealand has ever negotiated on trade and the environment, including commitments to prohibit subsidies which increase fishing capacity and to take steps to eliminate harmful fuel subsidies, and a specific article on climate change.
  • The environment chapter will also prioritise the elimination of tariffs on 293 environmentally beneficial products — the largest such list agreed in any FTA to date.
  • The Government is aiming for the agreement to enter into force by the end of 2022, after both partners have ratified the agreement through their respective parliaments.
Marilyn Hay
Tax Consultant, Wolters Kluwer

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